Russia to add Canadian dollar to reserves in coming months

Sujata Rao

3 Min Read

LONDON (Reuters) - Russia plans to add the Canadian dollar to its $444 billion gold and forex reserves in the next few months, but its share will be insignificant, Russian central bank first deputy chairman Alexei Ulyukayev said on Tuesday.

“We are discussing this (adding the Canadian dollar). It will be in several months’ time. Its share will be insignificant,” Ulyukayev told reporters on the sidelines of a conference in London.

He added that the Canadian dollar’s share would be smaller than that of the Japanese yen, which currently accounts for around 2 percent of Russia’s reserves.

Russia said last week it was making technical preparations to add the Canadian dollar as part of its policy to diversify reserves, with the comments helping push the U.S. currency to its lowest in over a year.

On Tuesday, currencies showed little reaction to Ulyukayev, with the U.S. dollar holding around C$1.0460, down 0.9 percent on the day and little changed from before the comments.

As well as the yen, Russia’s reserves -- the world’s third-largest -- are made up of around 47 percent U.S. dollars, 41 percent euros and 10 percent sterling.

Russia already has the mechanism to invest reserves in Swiss francs, but the capacity of that market is limited.

Officials have previously also mooted the Australian dollar as a possible investment, but Ulyukayev said on Tuesday no decision had yet been taken on this.

MORE RATE CUTS

The large reserves have made it easier for Russia to weather a recession this year, from which the economy is showing early signs of recovery, in part thanks to central bank rate cuts.

Ulyukayev said “there is a chance” of more monetary easing before the end of the year, in addition to the 400 basis points of cuts in the refinancing rate administered to date.

Analysts polled by Reuters had forecast that the refi rate will remain on hold at the current 9 percent in December, and cuts will only resume in 2010.

Ulyukayev reiterated that 2009 inflation will come in at around 9 percent or a little more, after a price rise of around 0.5 percent in December.

He added that November saw capital inflows into Russia, but smaller than the $9-10 billion seen the previous month. The scale of the central bank’s interventions in the currency market was also smaller than in October, he said.